Australia consumer confidence sunk by latest rate rise

Credit: REUTERS/STEVEN SAPHORE

SYDNEY, Nov 14 (Reuters) - Australian consumer sentiment darkened in November as a new increase in borrowing costs weighed on home owners and soured spending plans ahead of the crucial holiday shopping season, a survey showed on Tuesday.

The Westpac-Melbourne Institute index of consumer sentiment fell 2.6% in November from October, when it bounced 2.9%. The index reading of 79.9 showed pessimists greatly outnumbered optimists.

The index has been below the neutral 100 mark since March 2022, the longest streak since the early 1990s recession.

The survey found a 6% drop in confidence immediately after the Reserve Bank of Australia (RBA) last week lifted interest rates by a quarter point to a 12-year top of 4.35%, as it struggled to bring inflation to heel.

"Responses over the survey week show sentiment was heading for a slight gain prior to the RBA move," said Matthew Hassan, a senior economist at Westpac.

"The RBA's hike has put renewed pressure on family finances and reignited concerns about both the rising cost of living and the prospect of further rises to come."

A separate weekly survey of consumers from ANZ out on Tuesday showed its index slid 3.5% in the wake of the RBA move to a four-month low.

The Westpac survey found confidence among mortgage holders dived 5.3% to a deeply pessimistic 73.4.

The measure of family finances over the coming 12 months slid 7.3%, overshadowing a 2.0% rise in finances compared to a year ago. The economic outlook for the next year bounced 2.7%, but that for the next five years sank 6.4%.

The measure of whether it was a good time to buy a major household item fell 1.4%, while almost 40% of respondents planned to spend less on Christmas gifts than last year.

(Reporting by Wayne Cole Editing by Chris Reese)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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